State of Electric Vehicles in US and the key drivers of growth

Electric vehicles are all set to disrupt the way the world moves!. Fueled by the growing demand to curb vehicle pollution, carbon footprints, and a need to tap renewable energy sources and to replace the gasoline. Across the world, various countries are embracing the electric vehicle trend as part of their “zero emission and zero pollution” commitment.

Current state of Electric Vehicle in the US:

In the USA, although the government bodies have been undertaking key initiatives to promote adoption of electric vehicles, the market trends have shown a mixed pattern over the past few years.

In the US, the sale of electric vehicles increased by 25 percent in year 2017. Though this was considered a record sale, it still accounts for just 1.2 percent of all the vehicles sold in the US.

To put things in perspective, China has outnumbered US and Europe to lead the electric vehicle revolution registering a sale of 5,07,000 EVs and PHEVs in the year 2016. In that year, number of EVs sold in US was around 1,57,130.

But the sale of electric vehicles has been gaining pace gradually. This is mainly due to improvement in technology, government incentives and subsidies, and gradual reduction in EV prices.

According to InsideEV’s findings, within the US, the EV market share has increased by 1.6% in 2018 compared to last year. In March 2018, around 26,373 plug-in electric vehicles were sold in the US; compared to 18,542vehicles sold in March, last year.Note: In simplest terms, a plug-in car or a plug-in electric vehicle runs on electricity and can be recharged by plugging-in to an external source of electricity such as wall socket.

The consulting firm , McKinsey predicts that the US would have 10 to 11 million BEVs the year by 2030. The patterns of electric vehicle adoption have been observed to varyacross differentUS cities. California has about 350,000 electric vehicles, far more than any other American state.

According to a report by Coltura, a Seattle based non-profit group, Seattle has “the most advanced vehicle electrification program of any city in Washington with 92 pure EVs and 86 plug-in hybrid electric vehicles.

Factors leading to EV growth:

Key government policies for electrification of the vehicles

Government Policies are essential to increase awareness and gain acceptance among the consumers for any path breaking development initiatives such as Electric Vehicles.

Realizing the need for a policy based approach, US government has taken significant steps over the past decade to accelerate the penetration of EV in the market. Let us have a brief look at some of them:

Government decision to invest in charging infrastructures: According to the Unites States Energy Department, about 80% of the electric vehicle charging happens at home. There is huge gap between the number of available public electric vehicle charging facilities and the actual demand for them in various US states.

Some recent announcement by the state governmentscan help in bridging this gap; subsequently fueling the EV adoption.

For example, three US states – California, New Jersey, and New York – announced their plans to make investments of worth $1.28 Billion towards charging infrastructure of electric vehiclesin another 6-7 years. This move is expected to address the lack of charging utilities in public spaces in US states.

2. California’s Zero Emission Vehicle mandate:California has emerged as one of the top promoters of the electric vehicles amongst the American states. The California Air Resources Board has been promoting adoption of electric vehicles to meet the state’s greenhouse gas reduction goals through the zero-emissions vehicle, or ZEV.

According to the ZEV, automakers doing business in the state are required to sell a certain number of electric cars; they can either sell non-polluting cars or buy surplus credits earned by competitors that sell zero emission cars.

In January, 2018, the California Governor, Jerry Brown proposed a $2.5 billion plan to help put millions of electric cars on state roads and expand the number of charging stations.

Government incentives to promote Electric Vehicle Adoption: Government incentives and subsidies have contributed significantly to help increase the sales of electric cars.

For instance, the U.S. federal government provides income tax credit up to $7,500 depending on the vehicle battery size.

This tax credit for two-wheeled plug-in electric vehicles, known as the Section 30D was extended through 2018(Bipartisan Budget Act of 2018 – Extension of credit for 2-wheeled plug-in electric vehicles ; Sec. 40405).

Meanwhile, people in California can enjoy an additional benefit ( other than the federal credits) of $2,500 rebate on purchase of electric vehicle.

A paradigm shift in the Automotive industry:Auto-makers are thinking of overhauling their business models and rapidly investing in electric vehicles.

Investments in electrified vehicles, as announced by various automakers, have been estimated to be around $19 billion in the United States

Today, the number of automakers investing in electric vehicles, as the mainstream option for future transportation is rapidly growing.

Also today, people in US have far more options of electric vehicle models to choose from compared to what was available 9 years ago. From battery electric vehicles to plug-ins to fuel cell electric vehicles – consumers are spoilt for choices.

The following chart shows the gradual increase in number of electric vehicles available in North America –from 4 in 2008 to 54 in 2017, the range of electric car models has broadened:

Image Source: Business Insider

Partnerships to pace up the EV game:

Over the past few years, there has been an increase in public and private partnerships in the US aimed at encouraging people to adopt electric cars as an ecofriendly mode of transportation.

One interesting example of EV partnership is the ‘Drive Change. Drive Electric.’ campaign.

Considered a historic initiative, the campaign was launched at the New York International Auto Show (NYIAS) in March, 2018. ‘Drive Change. Drive Electric.’ is a public-private partnership between auto manufacturers and Northeast states. The campaign aims at “ increasing consumer awareness, understanding, consideration and adoption of electric cars, including battery electric, plug-in hybrid electric, and fuel cell electric vehicles.” Also, the New York Power Authority has planned to collaborate with private sector firms to install around 200 DC fast chargers every 30 miles , “along key interstate corridors” including New York major airports. This initiative will help in addressing the demand for more electric vehicle charging stations.

Concluding thoughts/ The beginning of a Change: Towards an Electrified future

While the EV buzz is surely making waves cross the automotive market, the actual impact and quantifiable success can be visible only if the consumer concerns and the crucial constraints are adequately addressed. High battery costs, lack of adequate charging infrastructure, shorter driving ranges, etc. are some of the major challenges associated with the electric vehicles.

Both the government bodies and stakeholders of automotive industry can collaborate here to address the pain points, while developing sustainable strategies to bring electric vehicles into mainstream and capitalize it.

About Author: Sreedevi Vamanan

Sreedevi Vamanan is a content professional trying to decode the B2B marketspace. She works with Embitel Technologies, a Bangalore based company that has carved a niche of its own in the realms of Automotive, IoT and E-commerce.